On November 8, 1994, the court issued a decision and order granting defendant's motion to dismiss plaintiff's first cause of action alleging a breach of contract. However, the defendant's motion for summary judgment on plaintiff's second cause of action was denied, leaving for determination the question as to whether the United States Department of Housing and Urban Development ("HUD") acted arbitrarily, with an abuse of discretion, and not in accordance with the law in determining that the plaintiff was not entitled to the full rental adjustment requested. The court held that the plaintiff's second cause of action was not barred by the statute of limitations.
After briefing, a second order was issued setting the procedures to be followed in resolving this dispute. The plaintiff argued that if the court found that the administrative record was inadequate, then it should consider affidavits or testimony in reaching a decision as to whether or not the action of the agency was arbitrary. The defendant, however, argued that the court should only look at the record to review the agency's final decision.
After considering the arguments, the court determined that the matter should be returned to the agency to supplement the record if necessary, and to determine whether racial bias played any role in the decision.
The agency has now completed the record by filing the declaration of Kenneth LoBene of the Department of Housing (Item 83). Mr. LoBene's declaration reviews the documents which have been filed in the record and presents an explanation of how the record reached its conclusions. The issues remaining before the court are whether HUD acted correctly in not approving the full rent increase requested by the plaintiff, and whether HUD's decision was tainted by bias on the part of Ronald Lonca, the HUD employee responsible for supervising the Jackson Square project.
The parties have filed briefs, and oral argument was held with the court on April 26, 1996. The following constitutes the court's findings of fact and conclusions of law.
Jackson Square owns a 160-unit low-income housing development in the Town of Amherst, New York. Effective March 13, 1979, it entered into a HAP contract with HUD pursuant to 42 U.S.C. § 1437(f), under which HUD agreed to make rental assistance payments to Jackson Square for the development's eligible tenants. Item 83, Ex. A. Under the terms of the HAP contract HUD established unit rents as follows:
40 one-bedroom units - $ 307 per month
60 two-bedroom units - $ 341 per month
50 three-bedroom units - $ 390 per month
10 four-bedroom units - $ 427 per month
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